Michael Jeffries is still CEO of Abercrombie & Fitch. The company has renewed Jeffries’ employment agreement for a second time, with this latest restructured agreement taking effect Feb. 1, 2014, when Jeffries' current agreement expires.
According to a regulatory filing, Jeffries will still have an annual base salary of $1.5 million, which will be reviewed every year. The new agreement has no retention or sign-on grant, and the formula for semi-annual equity grants contained in the 2008 agreement was eliminated. Similar to the 2008 contract, Jeffries can use the company aircraft for up to $200,000 of personal travel.
"Today's announcement is the result of an extensive review by the board and detailed discussion with shareholders during several months, and the specific terms of Mike's new contract reflect direct feedback from those discussions,” said Craig Stapleton, lead independent director of the board. “The new agreement employs a more simplified, performance-based compensation structure that is designed to align incentives closely with the success of the company and the interests of shareholders."
The move follows a letter sent to the company's board last week by Abercrombie investor Engaged Capital asking that Jeffries be replaced. But Stapleton lauded Jeffries as a visionary in the industry and credited him for reinventing, creating and evolving today's Abercrombie & Fitch and Hollister brands.
“Under his direction, Abercrombie & Fitch has grown from just 36 domestic stores and $50 million in sales in 1992 to having a global presence and more than $4 billion in sales today. Mike and his team have developed a long-term plan that builds upon past successes, while targeting the specific challenges that the company faces today. We believe he is the right person to embark on this plan, which we believe will deliver substantial and sustainable value."
Stapleton made no mention of various controversial comments that landed Jeffries and the company in hot water, including comments about the type of people he would prefer to see donning the company’s apparel made a few years ago but which resurfaced on social media outlets earlier this year and went viral. His comments sparked renewed debate about body image issues, bullying and discrimination. Although Jeffries insisted that his comments were taken out of context, they prompted a Glen Ellyn teen to organize a protest that got her a face-to-face with Jeffries and Los Angeles-based writer Greg Karber to launch a campaign wherein he donated A&F clothing to homeless people.
As a key element of the company's strategy to build internal candidates for succession planning, Abercrombie & Fitch will be creating new leadership positions for its major brands to enhance the brands' market presence. The company intends to recruit brand presidents to oversee the Abercrombie & Fitch and Abercrombie Kids brands, as well as the Hollister brand, respectively. The company has hired Herbert Mines Associates to assist in its search of external candidates to fill these leadership positions.
"Abercrombie & Fitch has always been highly focused on recruiting and cultivating the best talent for the company's success, and we believe that these new senior additions to the management team will help the company achieve its potential,” added Stapleton. “These new leadership positions will provide fresh perspectives on brand development as well as deepen our bench of talent at this critical time. The board fully supports the long-term plan that Mike and the management team have developed and the value that this plan and the actions we are taking will deliver for shareholders."
The company also announced that Leslee Herro is retiring from her position as EVP of merchandise planning, inventory management and brand senses in spring of 2014. Herro will remain with the company for a period in a non-named executive officer capacity providing advice and counsel to the company's leadership team and completing certain special projects.
"Leslee has been an incredible partner to me for the past 22 years,” said Jeffries. “Her deep insights in to the business, strong sense of culture and constant good humor will be sorely missed by me and everyone else with whom she has worked. Abercrombie & Fitch will never be quite the same without Leslee, and she will always be part of the Abercrombie & Fitch family. We wish her all the best as she chooses to focus on her own family."
Jeffries added that the company adapting to changing markets and consumer dynamics to drive top-line growth.
“I am honored to lead Abercrombie & Fitch forward, augment the best team in the industry and capitalize on the value of our iconic brands,” said Jeffries. “We are taking aggressive action to manage through the challenging teen retail environment by increasing our speed to market and enhancing our brand engagement. As ever, I am grateful to our team of dedicated and talented Abercrombie & Fitch associates and to the board for their guidance and support."